Heinz Profits Soften

NEW YORK - Feb 26/08 - SNS -- H. J. Heinz Company reported net income of U.S. $218.5 million on sales of $2,610.9 million during the third quarter ending January 30, compared to a net of $219 million on sales of $2,295.2 million during the same three month period last year.

This lifted net income for the first nine months of the current fiscal year to $650.9 million on sales of $7,382.5 million, compared to a net of $610.6 million on sales of $6,587.3 million during the first three quarters of the previous fiscal year.

The company said its North American Consumer Products division continued to deliver strong results, driven by solid execution and innovation. Sales and operating income grew at double-digit rates, up 13% and 13.3% respectively. Organic sales grew approximately 10%, with volume up 5.4%, due primarily to strong growth of Weight Watchers Smart Ones and Boston Market frozen entrees and Classico pasta sauces. New products, including Fruit Inspirations and Anytime Selections frozen entrees propelled sales of the Smart Ones brand. Net pricing increased 4.5% largely due to Fiscal 2008 price increases on Ore-Ida frozen potatoes, Heinz Ketchup and Smart Ones frozen entrees.

Heinz Europe posted sales and operating income growth of 13.5% and 8.2% respectively. Organic sales increased 6.6%, driven by solid volume growth of 3.9% and price of 2.7%. The volume increase was principally due to the strong performance of Heinz Ketchup and soup, Pudliszki branded products in Poland, and the favorable impact of new product introductions such as Weight Watchers Big Soups in Germany, Austria and Switzerland and new Honig convenience meal varieties in the Netherlands. Net pricing increased primarily as a result of commodity-related pricing initiatives. Divestitures reduced sales 1.2% and favorable exchange translation rates increased sales by 8.1%.

Heinz Asia/Pacific continued to drive very strong growth in sales and operating income, up 27.4% and 38.2% respectively. Volume improvements of 9.8% drove 14% growth in organic sales, led by strong performances in Australia, Indonesia, China and India and improved results across all businesses within the segment. New product introductions and increased marketing helped propel growth. Pricing increased 4.2% reflecting increases on ABC soy sauce and beverages in Indonesia, Long Fong frozen products in China and nutritional beverages in India. Acquisitions, net of divestitures, increased sales 2.8%, and favorable exchange translation rates increased sales by 10.7%.

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